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November 10, 2017 Article 4 min read
Many U.S. hospitals face similar challenges — missed opportunities in insurer and physician contracts, staff retention, fluctuating patient volumes — and as a result are breaching contractual obligations with their banks. Greater internal audit controls can flag issues early, helping avert crisis. Read more at Becker’s Hospital CFO.

Three docotrs discussing healthcareA growing number of U.S. hospitals are breaching contractual obligations with their banks, highlighting the need for greater internal audit controls that can flag such issues and stop a problem from becoming a crisis.

These hospitals, often smaller, rural facilities, are financed with bond debt or bank loans that require they remain in line with certain financial goals or covenants. For example, a hospital may have to hold sufficient cash to cover 150 days of expenses, or maintain a certain debt coverage ratio — sufficient free cash flow to potentially service debts. When a hospital falls below specific thresholds, such as having 110 days of cash on hand, they are obliged to hire consultants to help fix the problem. Lately, a growing number of hospitals are being forced by creditors to get such help, discovering that internal audit controls are needed.

Read more at Becker's Hospital CFO.